Finance

If you run a small business — even a simple shop or home-based manufacturing setup — one question always comes up:“How much did it actually cost me to sell this product?”That exact answer comes from something called Cost of Goods Sold (COGS).Understanding COGS helps you see your real profit, not just your sales numbers. For beginners learning accounting or business … [Read more...] about Cost of Goods Sold (COGS) Explained: Meaning, Formula & Example for Beginners

In our last article, we have discussed how to calculate the total assets turnover ratio to know how effectively a company is using its assets to generate sales. To compare a company's net profit with the total investments or assets, analysts calculate return on investment ratio. Its popularly known as ROI.Return on investment (ROI) is a performance measure that evaluates … [Read more...] about Return on investment – Why and How to calculate ROI

Interest coverage ratio measures the creditworthiness of a company by comparing earnings before interest and taxes (EBIT) with the interest. Its a financial ratio that measures company’s ability to make payments for debts. In other words, it gives a better picture to know the short-term financial health of a company.Here is the formula to calculate the ratio:Interest … [Read more...] about How to calculate Interest coverage ratio

Ratio analysis is designed to reveal financial strength and weaknesses of a company. By comparing company’s ratios to industry standards and competitors. you can easily know whether its financial position has been  improving or deteriorating over the years.Before analyzing financial statements of a company, we suggest you to examine quality of financial data available to … [Read more...] about How to calculate debt to assets ratio

Financial statement analysis is used by analysts to evaluate an investment in some kind of security such as equity or debt. In order to arrive at a decision or recommendation, analysts are required to evaluate the financial performance, position and true value of the company from its financial statements.The role of these financial analysts is to take the published … [Read more...] about Financial statement analysis: The basics for non-accountants